New Home Sales, Flash PMIs, Airline Earnings

Good morning contrarians! Welcome to the Daily Contrarian, our morning look at events likely to move markets. It is Thursday, Oct. 24. The Bottom Line segment of today’s podcast starts at (4:30) for listeners who want to skip ahead.

State of Play

Stocks dropped yesterday after disappointing existing home sales and earnings that left a little bit to be desired. Tesla (TSLA 0.00%↑) earnings after the close helped sentiment. As we eye our board of indicators for signs of direction at 0640, it appears that a rebound in risk appetite is in the cards:

• Stock index futures are positive, led by tech. The Nasdaq is up 0.9% with S&P 500 futures 0.5% to the good;

• Commodities are rebounding as well and that in a major way. WTI crude oil is up 2% to trade north of $72/barrel with copper up 1%. Precious metals are forging ahead again as as well, with silver up almost 2% and gold up almost 1%;

• Bonds also gaining ground, with the 2-year yield down 4 basis points to 4.05% whilst the 10-year is down 5bps to 4.19% (yields move inversely to prices);

• Cryptos aren’t doing anything. Bitcoin is changing hands around $67,000.

Economic Data

Initial jobless claims are out at 0830 seeing how it’s Thursday. Economists who were surveyed expect 243,000 new claims, effectively in line with the 241,000 recorded last week and ahead of the four-week average of 236,000.

Then we get S&P Purchasing Manager Indexes at 0945. There are three of these:

• Manufacturing PMI: expected to come in at 47.5, effectively the same as the 47.3 recorded last month and still below the 50 level that separates expansion from contraction;

• Services PMI: A reading of 55.0 is expected, down a bit from the 55.2 seen last month;

• Composite PMI: An average of the two. No economist estimate for this. Last month’s figure was 54.0.

New home sales are out at 1000. This is arguably the most crucial data release of the day after the carnage seen in existing home sales. The survey calls for 719,000 new sales, up a bit from the 716,000 recorded last month.

Earnings

• UPS (UPS 0.00%↑), a crucial bellwether for the state of e-commerce deliveries in the US, beat expectations and is rallying by 5% this morning;

• Unilever (UL 0.00%↑) results were positive as well. That stock is moving higher in the pre-market;

• Honeywell (HON 0.00%↑) the outlier as those results were mixed and the stock is down a bit ahead of the open;

• American Airlines (AAL 0.00%↑) and Southwest Airlines LUV 0.00%↑ are due intermittently

Slim pickings after the close. Deckers Brands (DECK 0.00%↑), Western Digital (WDC 0.00%↑), and Skechers (SKX 0.00%↑) are some of the more prominent names.